Trump’s Tariffs and Insurance — A Big Concern

Financial and insurance experts the world over say the tariffs announced by President Trump could end up pushing up costs for consumers and for insurers. To begin, look for higher costs for auto parts imported from other countries. The supply chain will also likely be impacted which also drives up costs.

Most of you have heard of the tariffs but don’t know the numbers. Here are the highest. numbers:

• Vietnam — 46%
• China — 34%
• Taiwan — 32%
• The European Union — 20%

Canada and Mexico will also face high tariffs averaging 25%.

Dr. Robert Hartwig is an insurance guru who — at one time — headed up the Triple-I and was the go-to person when media had insurance questions. Hartwig is now a professor of finance and director of the Center for Risk and Uncertainty Management at the Darla Moore School of Business at the University of South Carolina.

“The tariffs are more sweeping than I would have anticipated,” he said and noted the tariffs will seriously impact the cost of autos and could end up adding over $11 billion to auto insurance premiums.

“It would be billions more additional dollars in commercial auto,” he said.

So far, the American Property Casualty Insurance Association (APCIA) has not issued a yay or nay on the tariffs but it did agree with Dr. Hartwig that the tariffs could drive up the cost of new vehicles. The APCIA also pointed out that 60% of auto replacement parts used in the U.S. come from Canada, China or Mexico.

Alex Bertolotti runs insurance at PricewaterhouseCoopers in London, He said the cost of insurance could be impacted by the extended amount of time it takes to import goods.

“Anything that extends the time taken to undertake a repair increases the expense of an insurance claim,” he said. “And imposing tariffs typically leads to supply chain pressures as it takes longer to import goods due to the time taken to administer or implement the tariff.”

He also pointed out that the supply chain disruptions may drive up the cost of business interruption claims.

Last week, AM Best director Ann Modica said the tariffs could put a lot of uncertainty in underwriting and insurance company investing.

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